View full sizeDoug Beghtel/The OregonianEdward Barrows anchors plywood over the windows of a vacant home in Northeast Portland with help from John Easom (right) last week.

Mitch McKee clicked off his flashlight and walked out of a Northeast Portland house with broken windows, a fire-damaged roof, no working utilities and garbage piled waist-high in a detached garage.

"They cleaned up a bit," he told police officers waiting outside.

The quick check last week that the house was empty was, in fact, pretty low-key for the Portland senior housing inspector who has become the point man for the city's recession-fueled stock of dilapidated homes.

Such houses are a growing problem in the region, and one that used to mostly take care of itself. Some abandoned homes attract squatters and become havens for drug use and other illegal activity. Others, like houses lacking utility service or that have structural damage, are simply unsafe.

The city is taking aim at them all through its Extremely Distressed Properties Enforcement Program. McKee, the program's one full-time inspector, has had 63 complaints sent his way since January. He's had time to look into 25, and about 11 houses have been vacated and boarded up. Two are headed for demolition – and the city hasn't demolished a house for code violations in more than a decade because developers were willing to buy properties and demolish the structures on their own.

Why so much time spent on so few houses? McKee focuses most of his time dealing with houses in the limbo between foreclosure and repossession.

Lenders aren't legally responsible for maintenance until it is formally repossessed. If the owner has abandoned the house -- or, in several of McKee's cases, died -- it can be difficult to determine who is responsible for a house's upkeep, or even who can give the city permission to take preventative measures such as boarding up windows. And coordinating with some of the largest banks in the country on one small house in Portland can be a headache.

"We're hitting a wall with the phone tree, trying to get ahold of somebody," said Mike Liefeld, enforcement manager for the Bureau of Development Services. "Our goal is final resolution using our ultimate code authority. When (complaints) are elevated to this level, the city's goal is to solve the problem."

A gray area

Fewer than half of the homes in the program are actually in foreclosure, but the complications of the gray area between homeownership and foreclosure mean they take up most of McKee's time.

Take, for example, a home on North Buffalo Street that has long drawn the ire of neighbors. Christine Duffy, the chair of the Arbor Lodge Neighborhood Association who lives on the same block, said the house found its way onto Craigslist as a free place to stay.

"You'd see all kinds of people coming and going in the middle of the night," Duffy said. "It's what can happen to any vacant property when they sit vacant for a while." According to Multnomah County records, the home was first scheduled for foreclosure sale in December 2010, but the bank called off the sale. It's now scheduled for auction next month.

In the meantime, no one at Bank of America gave permission to vacate the house of people staying illegally and allow the city to board up entrances.

Threatening demolition

Portland officials held an administrative hearing for a warrant to board up the house and, when break-ins continued, scheduled a hearing for permission to tear down the house.

That got someone's attention. A Bank of America representative attended the hearing and agreed to provide basic maintenance and routine checks that the property was staying vacant.

"We weren't able to get anywhere until we held that hearing and proposed demolition, and we were prepared to go through with it," Liefeld said. "That's the goal. We're leveraging our ultimate authority to try and get a responsible party to comply with adopted codes."

The program has $200,000 available for costs like boarding up houses, which can cost as much as $3,000 apiece, and demolitions, which can cost up to $15,000.

Those costs are assessed as liens against the property, but likely won't be paid back until the property is sold. And while most lenders will require liens be paid off to finance a purchase, the lien can simply be passed on with the property.

The city has also proposed a registry of contacts for abandoned homes in foreclosure.

But abandoned homes are not only a Portland problem. For example, the Hillsboro City Council earlier this month approved a registry for abandoned properties, including those that are in foreclosure or bank-owned. That registry must include a local contact -- within 30 miles of the property -- to notify in case of complaints.

Clay Neal, director of public safety for Portland Mayor Sam Adams, said Portland's program could be in place by the end of the year.

"If we had that information about who to contact, it's helpful in case the property becomes a problem for the city or neighbors," Neal said. "It's good to have that information for the case that does go wrong."

The city has consulted with the Oregon Bankers Association on such a program. Kevin Christiansen, that organization's director of government affairs, said the discussion has been beneficial, but cautioned against adding new steps to the already cumbersome foreclosure process.

"Any time you're adding extra burdens to the foreclosure process in terms of regulation, you're adding one more burden that can slow down the system," Christiansen said.

He added that lenders have taken steps to preserve properties when they can, but in most cases can only act once they have taken ownership. That's often a lengthy process.

"Until the foreclosure sale actually takes place, our banks aren't the owner of record," Christiansen said. "I think our banks are interested in trying to preserve what they can and address concerns, but with respect to whoever owns the property."

In the case of the house on North Buffalo Street, Bank of America's intervention puts off the city's demolition plans so long as the bank takes on basic maintenance responsibilities. If it doesn't live up to the agreement, Liefeld said, the city will pursue demolition again.

For Duffy, who said she sought the bank's intervention for years leading up to the hearing this month, real consequences are key.

"We've heard this story before, that they were going to complete the foreclosure and auction it off, and it didn't happen," she said. "This is real protection for the neighborhood."